MedAssets Reports Fourth Quarter and Full-Year 2012 Financial Results

MedAssets Reports Fourth Quarter and Full-Year 2012 Financial Results

ATLANTA--(BUSINESS WIRE)-- MedAssets, Inc. (NAS: MDAS) today announced results for its fourth quarter and full year ended December 31, 2012. Fourth quarter results are summarized in the table below:

  ($ in millions, except per share)       4Q-12     4Q-11     % Change
Net Revenue:
Spend and Clinical Resource Mgmt (SCM)

$

99.1

$ 103.1 - 3.9 %
Revenue Cycle Management (RCM)   64.7     53.7 20.6  
Total Net Revenue 163.8 156.8 4.5 %
Net (loss) income (14.4 ) 4.1 nm
(Loss) earnings per share (EPS) - diluted (0.25 ) 0.07 nm
Non-GAAP adjusted EBITDA 55.0 53.7 2.4 %
Non-GAAP adjusted EPS - diluted $ 0.27 $ 0.32 - 15.6
Weighted average shares - diluted a 58.1 58.5 - 0.6 %
 

(a) Given the Company's net loss for the three months ended December 31, 2012, basic and fully diluted weighted average shares are the same for EPS and non-GAAP adjusted EPS.


Net Revenue

Fourth Quarter

Total net revenue for the fourth quarter of 2012 increased 4.5% to $163.8 million from $156.8 million for the fourth quarter of 2011. Net revenue in the SCM segment decreased 3.9% to $99.1 million from net revenue of $103.1 million for the fourth quarter of 2011, due primarily to an expected year-over-year decline in performance fee revenue, partially offset by growth in embedded management services, workforce management and Service Line Analytics. Net revenue in the RCM segment increased 20.6% to $64.7 million from $53.7 million for the fourth quarter of 2011 as services-related revenue increased 50.8% due primarily to growth from the implementation of a number of customers, and technology-related revenue grew 10.6% due to growth in subscription fees from multiple products.

Full Year

Total net revenue for full-year 2012 increased 10.7% to $640.1 million from $578.3 million for full-year 2011. Comparing period-over-period organic growth, total net revenue of $640.1 million for full-year 2012 increased 9.5% from total non-GAAP net revenue of $584.5 million (including non-GAAP acquisition-related purchase accounting revenue adjustments) for full-year 2011. Net revenue in the SCM segment grew 6.3% to $393.6 million from non-GAAP net revenue of $370.2 million for full-year 2011. Net revenue from the RCM segment increased 15.1% to $246.5 million from $214.3 million for full-year 2011 as services-related revenue increased 21.6% and technology-related revenue grew 12.3%.

Non-GAAP Adjusted EBITDA

Fourth Quarter

Total non-GAAP adjusted EBITDA was $55.0 million, or 33.6% of total net revenue, for the fourth quarter of 2012, a 2.4% increase from total non-GAAP adjusted EBITDA of $53.7 million, or 34.2% of total non-GAAP net revenue, for the fourth quarter of 2011. This year-over-year increase was due to consolidated net revenue growth offset by a year-over-year decline in performance fee revenue.

Full Year

For full-year 2012, total non-GAAP adjusted EBITDA was $207.3 million, or 32.4% of total net revenue, a 12.6% increase over total non-GAAP adjusted EBITDA of $184.1 million, or 31.5% of total non-GAAP net revenue, for full-year 2011.

Net Income and Non-GAAP Adjusted Earnings Per Share (EPS)

Fourth Quarter

The Company reported a net loss for the fourth quarter of 2012 of $14.4 million, or a loss of $0.25 per share, due to debt extinguishment charges to write off $20.0 million of non-cash deferred financing costs and original issue discount, as well as an $8.2 million swap termination expense concurrent with its new debt agreement completed in December 2012. For the fourth quarter of 2011, the Company reported net income of $4.1 million, or earnings of $0.07 per share.

Non-GAAP adjusted EPS (defined as EPS excluding non-cash acquisition-related intangible amortization and depreciation, non-cash share-based compensation, certain acquisition and integration-related expenses and non-recurring items on a tax-adjusted basis) decreased 15.6% to $0.27 per share for the fourth quarter of 2012, versus non-GAAP adjusted EPS of $0.32 per share for the fourth quarter of 2011.

Full Year

For full-year 2012, the Company reported a net loss of $6.9 million, or a loss of $0.12 per share, due to the debt extinguishment charges referenced earlier. For full-year 2011, the Company reported a net loss of $15.5 million, or a loss of $0.27 per share, due to acquisition and integration-related expenses associated with the acquisition of The Broadlane Group in November 2010 and subsequent integration.

Non-GAAP adjusted EPS was $1.13 per share for full-year 2012, a 14.1% increase over non-GAAP adjusted EPS of $0.99 per share for full-year 2011.

Cash Flow and Capital Resources

Cash provided by operating activities was $157.9 million for full-year 2012, a 27.1% increase from $124.2 million in 2011. Non-GAAP free cash flow (defined as cash provided by operating activities less purchases of property, equipment and software and capitalized software development costs) for full-year 2012 was $91.4 million, up 21.6% from non-GAAP free cash flow of $75.2 million for full-year 2011.

The Company's balance sheet at December 31, 2012 included $871.3 million in total bank and bond debt, net of cash and cash equivalents. Total net debt equates to leverage of approximately 4.2 times non-GAAP adjusted EBITDA for the trailing twelve-month period.

2013 Financial Guidance

MedAssets introduced full-year 2013 financial guidance, as follows:

($ in millions, except per share)       FY 2013       Y-Y % change
Net Revenue:
SCM segment $ 414.0 - 422.0 5.2 - 7.2 %
RCM segment   255.0 - 263.0 3.4 - 6.7  
Total Net Revenue 670.0 - 684.0 4.7 - 6.9
Non-GAAP adjusted EBITDA 215.0 - 225.0 3.7 - 8.5 %
GAAP EPS - diluted 0.33 - 0.43 nm
Non-GAAP adjusted EPS - diluted $1.22 - 1.32 8.0-16.8 %
 

Non-GAAP Contracted Revenue

At December 31, 2012, MedAssets rolling 12-month non-GAAP contracted revenue estimate was $600.7 million (SCM segment - $364.7 million; RCM segment - $236.0 million), a year-over-year increase of 5.6%. Non-GAAP contracted revenue is the Company's estimate of contractually committed revenue to be generated under existing customer contracts in the forward 12-month period.

Conference Call Information

Time/Date:   5:00 p.m. ET today, Wednesday, February 20, 2013
Phone: 866-200-6965 (or 646-216-7221 for international/local callers), PIN code 10489277
Webcast:

http://ir.medassets.com, "Events & Presentations" page; Archive will be available for over 30 days

Replay: Call 866-206-0173 or 646-216-7204 (PIN code 279334)
 

Note: The live webcast will include a PowerPoint presentation. A PDF copy of the slide presentation is available on the "Events & Presentations" page at http://ir.medassets.com in conjunction with today's event.

About MedAssets

MedAssets (NAS: MDAS) partners with healthcare providers to improve their financial strength by implementing revenue cycle, spend and clinical resource management solutions that help capture revenue, control cost, improve margins and cash flow, increase regulatory compliance, and optimize operational efficiency. MedAssets serves more than 4,200 hospitals and 122,000 non-acute healthcare providers. The company currently manages more than $50 billion in supply spend and touches over $365 billion in gross patient revenue annually through its revenue cycle solutions. For more information, go to www.medassets.com.

Use of Non-GAAP Financial Information

In order to provide investors with greater insight, promote transparency and allow for a more comprehensive understanding of the information used by management and the board of directors in their financial and operational decision-making, the Company supplements its consolidated financial statements presented on a GAAP basis herein with the following non-GAAP financial information: gross fees; gross administrative fees; revenue share obligation; acquisition-related purchase accounting revenue adjustments; EBITDA; adjusted EBITDA; adjusted EBITDA margin; adjusted net income; diluted adjusted EPS; free cash flow; and contracted revenue. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures, where possible, are included in the accompanying financial schedules. Also, see "Use of Non-GAAP Financial Measures" following the financial schedules for more information.

Safe Harbor Statement

This Press Release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, and include the intent, belief or current expectations of the Company and its management team with respect to the Company's future business operations that include, but are not limited to: 2013 financial guidance, revenue growth and other financial projections and forecasts; and the Company's ability to successfully integrate and capitalize on synergies associated with acquisitions. Any forward-looking statements are not guarantees of future performance, involve risks and uncertainties, and actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Press Release include, but are not limited to: failure to realize improvements in performance, efficiency and profitability; failure to complete anticipated sales under negotiations; failure to successfully implement revenue backlog; lack of revenue growth; customer losses; and adverse developments with respect to the operation or performance of the Company's business units or the market price of its common stock. Additional factors that could cause actual results to differ materially from those contemplated within this Press Release can also be found in the Company's Risk Factor disclosures in its Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission and available at http://ir.medassets.com.The Company disclaims any responsibility to update any forward-looking statements.

mdas/F

               
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
In 000s, except per share data Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 % Change 2012 2011 % Change
Revenue:
Administrative fees, net $ 66,163 $ 70,567 -6.2 % $ 266,915 $ 249,599 6.9 %
Other service fees   97,617     86,214   13.2 %   373,206     328,673   13.5 %
 
Total net revenue   163,780     156,781   4.5 %   640,121     578,272   10.7 %
 
Operating expenses:
Cost of revenue 38,035 31,200 21.9 % 138,618 121,771 13.8 %
Product development expenses 7,706 7,177 7.4 % 28,483 26,823 6.2 %
Selling and marketing expenses 13,729 13,543 1.4 % 60,438 56,997 6.0 %
General and administrative expenses 52,617 53,994 -2.6 % 218,194 203,101 7.4 %
Acquisition and integration-related expenses 1,536 1,838 -16.4 % 6,348 24,551 -74.1 %
Depreciation 8,774 5,988 46.5 % 30,190 22,402 34.8 %
Amortization of intangibles   17,401     19,810   -12.2 %   72,652     80,510   -9.8 %
 
Total operating expenses   139,798     133,550   4.7 %   554,923     536,155   3.5 %
 
Operating income 23,982 23,231 3.2 % 85,198 42,117 102.3 %
Other income (expense):
Interest expense (15,323 ) (17,141 ) -10.6 % (66,045 ) (71,083 ) -7.1 %
Loss on debt extinguishment (28,196 ) - (28,196 ) -
Other income   236     851   nm   685     3,621   nm
 
(Loss) income before income taxes (19,301 ) 6,941 nm (8,358 ) (25,345 ) nm
Income tax (benefit) expense   (4,947 )   2,794   nm   (1,480 )   (9,851 ) nm
 
Net (loss) income (14,354 ) 4,147 nm (6,878 ) (15,494 ) nm
 
Basic net (loss) income per share   (0.25 )   0.07   nm   (0.12 )   (0.27 ) nm
 
Diluted net (loss) income per share $ (0.25 ) $ 0.07   nm $ (0.12 ) $ (0.27 ) nm
 
Weighted average shares — basic 58,087 57,189 57,452 57,298
Weighted average shares — diluted 58,087 58,451 -0.6 % 57,452 57,298 0.3 %
 

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
December 31, December 31,
In 000s, except share and per share amounts 2012 2011
 
ASSETS
Current assets
Cash and cash equivalents $ 13,734 $ 62,947
Accounts receivable, net of allowances of $3,046 and $3,891 as of December 31, 2012 and
December 31, 2011, respectively 96,346 104,039
Deferred tax asset, current 11,126 15,434
Prepaid expenses and other current assets   21,791     18,488  
 
Total current assets 142,997 200,908
 
Property and equipment, net 134,361 101,471

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